Ethan On A Tangent

The Gambler’s Fallacy and Pokémon!

Ethan Tang -

We’ve all been there—watching a roulette wheel spin, convinced that after five reds in a row, black is “due.” Or betting on a sports team that’s “bound to win” after a losing streak. This intuition feels right, but it’s wrong. Welcome to the Gambler’s Fallacy.

The Fallacy Explained

The Gambler’s Fallacy, also known as the Monte Carlo Fallacy, is the mistaken belief that past events influence future probabilities in random systems. Example: You flip a fair coin five times, and it lands heads each time. The fallacy convinces you tails is “more likely” on the sixth flip. In reality, the coin’s odds remain 50/50—each flip is independent.

This fallacy arises because we misapply the law of large numbers. Over time, probabilities balance out, but short-term randomness is streaky and unpredictable. That streaky chaos feels wrong to us, so we look for patterns to explain it.

Everyday Traps

The Gambler’s Fallacy extends far beyond casinos:

  • Investing: Thinking a stock “must rebound” after consecutive losses.
  • Dating: Believing you’re “due for luck” after bad matches.
  • Hiring: Rejecting a candidate because the last few hires didn’t work out.

Pokémon Tins and Rare Cards

A friend of mine bought a set of Pokémon tins, hoping to pull rare cards. After opening the first two, he was thrilled—he had already pulled two of the “rarest” cards (Umbreon Vmax and Garbodor Vmax), each of which he pegged at a 1/100 chance.

But then he reasoned, “Those remaining tins are unlikely to have anything good, I already hit the jackpot.”

Here’s the problem: Each tin’s contents were random and independent. Just because he’d pulled rare cards didn’t change the odds for the unopened tins. He’d fallen squarely into the Gambler’s Fallacy—believing past outcomes could influence future probabilities in a random system.

A Con in Disguise

While fascinating, understanding the fallacy doesn’t guarantee you’ll avoid it. Even seasoned professionals—traders, scientists, statisticians—fall prey to this bias. A 2016 study showed that professional athletes, investors, and gamblers routinely rely on “streak-breaking” logic. Recognizing this isn’t just an intellectual exercise; it’s a mental habit you must build over time.

Practical Strategies

  • Reframe probabilities: Treat each event as independent unless proven otherwise.
  • Check the math: When making decisions, verify your assumptions against data.
  • Slow your thinking: Streaks and randomness trigger emotions. Step back and reflect before reacting.

For investors: Focus on fundamentals, not patterns. For relationships: Treat every new interaction as unique. In life: Expect streaks, and don’t overreact.

Why This Matters

Falling for the Gambler’s Fallacy leads to bad bets—not just in casinos, but in everyday decisions. Whether you’re managing finances, relationships, or your next career move, separating randomness from reality is crucial. Luck doesn’t keep score.

Key takeaway: Resist the urge to think randomness “balances out” in the short term. Trust the probabilities, not the patterns.